Correlation Between Ford and First Eagle
Can any of the company-specific risk be diversified away by investing in both Ford and First Eagle at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and First Eagle Fund, you can compare the effects of market volatilities on Ford and First Eagle and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and First Eagle.
Diversification Opportunities for Ford and First Eagle
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ford and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and First Eagle Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Fund and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Fund has no effect on the direction of Ford i.e., Ford and First Eagle go up and down completely randomly.
Pair Corralation between Ford and First Eagle
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the First Eagle. In addition to that, Ford is 3.47 times more volatile than First Eagle Fund. It trades about -0.09 of its total potential returns per unit of risk. First Eagle Fund is currently generating about 0.24 per unit of volatility. If you would invest 2,725 in First Eagle Fund on November 8, 2024 and sell it today you would earn a total of 96.00 from holding First Eagle Fund or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. First Eagle Fund
Performance |
| Timeline |
| Ford Motor |
| First Eagle Fund |
Ford and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and First Eagle
The main advantage of trading using opposite Ford and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, First Eagle can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Eagle will offset losses from the drop in First Eagle's long position.The idea behind Ford Motor and First Eagle Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| First Eagle vs. Fidelity Sai Inflationfocused | First Eagle vs. Loomis Sayles Inflation | First Eagle vs. Tiaa Cref Inflation Linked Bond | First Eagle vs. Cref Inflation Linked Bond |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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